Direct Line Insurance Share Discussion Threads

[jason29] 25/3/2024 16:58

Btw I thought DLG got in to trouble originally on the Home Side of things due to Storms of a few years ago?

Right now, imo anyway, they have the Motor side of things messed up trying to catch up. They are losing Customers hand over fist, which won't end well with other Insurers more than happy to take up the slack.

Just my opinion, shoot me down if you like.

[jason29] 25/3/2024 16:52

To be fair, he/she called it right and before it happened. In my book that deserves a bit of credit.......

My opinion is I wouldn't be looking to buy these at anything over 160 now tbf, I think the Board have already blotted their copy book by turning down the Bid and it is patently clear even with a potentially one off Dividend of 4p they have a long way to go before they are credible again.

Apologies for being negative, I know people don't like it, but's an opinion, no more no less.

[pander45] 25/3/2024 16:19

Modest aren't you? Arrogance is rarely attractive unless it is accompanied by unsurpassed intelligence. You don't qualify.

[adejuk] 25/3/2024 16:12

as i said
sell the spike
sorry to be right

[wba1] 25/3/2024 14:41

It is a bit early to be sure on future prospects. They depend on 2 factors; underwriting performance and Winslow's performance in getting DLG into shape. We know nothing of the latter as yet and the difference a CEO can make can be seen in Amanda Blanc at Aviva. I admit I had severe doubts when she was appointed (as I knew her at Towergate) but she has made a huge difference. If Wilmslow can do as good a job he is worth 50p on the price - but until we know more that must be set aside.

The immediate question is the business outlook and for 2024/5 that remains very dependent on motor. But it is possible to estimate 2024 loss ratio (and COR) from the data and comments in the 2023 results. The reported accident year motor loss ratio for 2023 was 86.7% compared to 79.9% in 2022 - but we also know that they had to strengthen prior years by 8.8% in 2023 and most of that related to 2022. So, in reality and assuming 2023 accident year reserving in reasonable (ie the claims processes and management have been corrected) the 2023 and 2022 accident year loss ratios are probably very similar. They have also said they were writing business to their target return from August. But the earnings pattern means that business written August to December 2023 will only have produced circa 10% of the earned premium for the year. And the business written from January to July 2023, presumably at less than the target, will only account for circa 20% of 2024 earned premium. All of this means 90% of 2023 motor earnings were written below target margin and 80% of 2024 motor earnings will have been written at (or above) target (if we believe DLG). Given that rates continued to increase between August 2023 and the end of the year I would make the simple assumption that 2024 earnings written above target will, broadly, balance the 20% written below target (with the rest written to target). What does all this mean? Assuming the target is 90% COR (a 10% net insurance margin as they quote) this would suggest an accident year loss ratio in 2024 of a liitle under 70%, 17% better than in 2023 and 26% better for the financial year if prior year reserves are neutral. That is a huge amount of money. Something over £600m straight to the bottom line. My view is that may be a touch high and £4-500m would be a better assumption allowing for the Motability partnership and reinsurance. Still a very nice recovery with more to come in 2025.

If Winslow can push through the cost savings (even if the net effect is a little negative in 2024 with one off costs) and get other lines moving it is difficult to see why DLG cannot make very good money for the next 2 years. But the real questions remain. How to diversify and reduce exposure to the motor pricing cycle and how to stabilise and grow the customer base. The market sometimes pays more attention to customer numbers than profit in the good years.

[nellynell] 25/3/2024 13:12

Lol so many doom mongers on here. Let's break it down apart from the motoring division every other part has seen growth and profit. Motoring division was loss making due to policies written in 2022 and 2023. All policies written from August 2023 have been at the new margins. Cost cutting underway. Dividends back expecting at least 10p for 2024. So what can Mr Winslow use the 100 million savings for? How about a nice share buyback to offset the loss of earnings from the commercial division that we havs sold. Turnaround in progress. Ex dividend 4th April onwards and upwards

[alex1621] 25/3/2024 13:10

I don't agree. The fact that the organisation has been badly managed gives Winslow the opportunity to get it back on track, by reducing the cost base, utilising better technologies and making better policy decisions. We will see a new strategic plan in July and he's got a year to show progress. If he does then there is the potential to get to 300p and beyond. Peter Wood said that DLG had been badly managed for years, yet it hovered around the 300p level for a good period of time. So that target shouldn't be beyond reach.

[chriss911911] 25/3/2024 12:39

Ageas reduces price target to Nil pence, now no underpin either, will just drift now.

A modest 2.2% dividend, and still they are not confident, to quote their CEO "this dividend should not be regarded as a resumption of regular dividends"

So we have the door open for bad news, if we automatically imagine dividends have "resumed".

Even if they hit earnings hard to see this much more than where it is already, so I don't get the price for it, forget charts, is it worth it, and especially v what other insurers are trading up, still very expensive, for not much potential.

[smurfy2001] 25/3/2024 10:51

What a shower.

[skinny] 25/3/2024 10:48

FWIW :-

UBS raises Direct Line price target to 240 (235) pence - 'buy'

Jefferies raises Direct Line price target to 240 (210) pence - 'buy'

[zimbtrader] 25/3/2024 10:07

Disappointing.My prediction is definitely no interim dividend this year and that this will never be the dividend cash cow it once was. The new CEO has, basically, put the priority on protecting his position at the expense of shareholders as I believe he should have given us the opportunity to decide if the second offer was good enough or not. Especially so after that set of pretty grim results which will be a mammoth task to turn around.

[jubberjim] 25/3/2024 09:59

Am long at 208 so little bit regretful that didn t take the opportunity to bail when the chance arose.
Particularly when I seen the share holder invited to get involved was Fosun .

Don t have very fond memories of this particular company think ' T Cook '

Hope it works out but serious doubts remain

Won t be adding anytime soon

Good luck

[jugears] 25/3/2024 09:40

wba1, Typical market over reaction & investors that can't see long term that DLG will return far more to investors than being taken over!

[wba1] 25/3/2024 09:19

I have just bought back in at 182.8. I did not expect it to fall quite this far (and it may yet fall a bit further) but over a 12 month outlook it is a good bet at this level on both recovery and other possible bidders.

[jugears] 25/3/2024 09:03

I wonder how many idiots pannick sold this morning

[garycook] 25/3/2024 08:38

unastubbs, Wrong thread I believe !

[unastubbs] 25/3/2024 08:36

International Methane Emissions Observatory

[jugears] 25/3/2024 08:24

Yes we new that on Friday have you been asleep???? definitely good news IMEO, happy to buy more at this price for long term recovery.

[stevensupertrader] 25/3/2024 08:12

Ageas pulls out off the takeover

[laurence llewelyn binliner] 25/3/2024 07:10

The Board is confident in Direct Line Groups standalone prospects..Over to you Adam to now demonstrate such.. :o)

[jubberjim] 25/3/2024 07:05

Be grateful for small mercies

The share price has gone up at least 20 % since the bid was announced so looks lot more palatable.

Although disappointed that the suitor couldn't or wouldn't follow through .
In a much better position than before bid was first mooted.

Now we wait to see how it pans out

No rush to buy but neither any urgency to sell

270 will get the job done.

[pander45] 25/3/2024 06:56

Some things are less a conspiracy (a word thrown about far too much by the way) and just plain obvious common sense.

[boix] 24/3/2024 22:28

Now you’ve lost me.
Are you suggesting some sort of giant conspiracy?

[pander45] 24/3/2024 22:20

Of course the more the share price falls the better it makes their former bids look, and any possible further bid that may happen. Although the chance of this now has to be slim.